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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Mylan NV was -0.52. The lowest was -4.35. And the median was -2.47.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Mylan NV for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.389||+||0.528 * 0.9861||+||0.404 * 1.2097||+||0.892 * 1.2117||+||0.115 * 0.7567|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0499||+||4.679 * -0.0249||-||0.327 * 0.6653|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $2,917 Mil.|
Revenue was 2695.2 + 2371.7 + 1871.7 + 2082.7 = $9,021 Mil.
Gross Profit was 1315.3 + 1008.1 + 830.1 + 969 = $4,123 Mil.
Total Current Assets was $6,486 Mil.
Total Assets was $21,317 Mil.
Property, Plant and Equipment(Net PPE) was $1,885 Mil.
Depreciation, Depletion and Amortization(DDA) was $860 Mil.
Selling, General & Admin. Expense(SGA) was $2,010 Mil.
Total Current Liabilities was $3,684 Mil.
Long-Term Debt was $5,846 Mil.
Net Income was 428.6 + 167.8 + 56.6 + 189.2 = $842 Mil.
Non Operating Income was -50.9 + -2 + -18.5 + -38.1 = $-110 Mil.
Cash Flow from Operations was 974.8 + 114.7 + 267 + 126.6 = $1,483 Mil.
|Accounts Receivable was $1,733 Mil.
Revenue was 2084 + 1837.3 + 1715.6 + 1808.5 = $7,445 Mil.
Gross Profit was 1012.4 + 808.8 + 737.8 + 795.9 = $3,355 Mil.
Total Current Assets was $5,818 Mil.
Total Assets was $15,174 Mil.
Property, Plant and Equipment(Net PPE) was $1,738 Mil.
Depreciation, Depletion and Amortization(DDA) was $540 Mil.
Selling, General & Admin. Expense(SGA) was $1,580 Mil.
Total Current Liabilities was $4,474 Mil.
Long-Term Debt was $5,724 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2917.1 / 9021.3)||/||(1733.3 / 7445.4)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1008.1 / 7445.4)||/||(1315.3 / 9021.3)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6485.9 + 1884.7) / 21316.5)||/||(1 - (5817.8 + 1738.3) / 15174.1)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(540.2 / (540.2 + 1738.3))||/||(859.9 / (859.9 + 1884.7))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(2010.1 / 9021.3)||/||(1580.1 / 7445.4)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((5845.8 + 3684.1) / 21316.5)||/||((5723.5 + 4473.9) / 15174.1)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(842.2 - -109.5||-||1483.1)||/||21316.5|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Mylan NV has a M-score of -1.90 signals that the company is likely to be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Mylan NV Annual Data
Mylan NV Quarterly Data